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THE AITORNEY GENERAL OF TEXAS

September 25, 1957

Hon. Robert S. Calyert, OPINIONNO. WW-262 Comptrol,ler

of PublicAccounts Capitol Station Re: Whether deceased joint Austin, Texas tenant's interest is subjectto inheritance
Dear Mr. Calvert: tf;Etnder submitted

. We quote the following excerpt fromyour letter requesting the opinion of this office on the above captionedmatter.

"An inheritancetax reporthas been filed with this department for the estate of Nellie R. Dillln who died intestatea resident of th'o Stata of Iowa by the decedent's two surviving sisters,Mrs. Cora B. Watts and Mary Lois Dlllin. "The only property owned by the deceased In the State of Texas is an undivided one-third (l/3) Interest in 320acres in the John Mark Survey, Abstract 555, Harris County, fully described In a deed dated October 16, 1926, of record in Volume 681, page 126, of the Harris CountyDeed Records, in which the father of Mrs. Cora B. Watts,Mary Lois Dlllln, Blanche T, Dillln andNellie R. Dillin, conveyed the property to them, his four daughters,as joint tenantswith tha expressprovision that upon the death or deaths of any of the four grantees the survivorsof them would take the title to saidproperty. Blanche T. Dlllln died in 1952, and her undivided onefourth (l/4) interest did not have sufficient value at that time to tax. The statut,oryexempions of the three surviving sistersexceeded the value of the Texas property." You state that the undivided one-third interest of Nellie R. Dlllin now exceeds the statutoryexemption and request the opfnion of this office as to whether that interestwas, upon passing to the survivors, subject to an inheritance tax,Hon. Robert S. Calvert Page 2 OpinionNo. ww-262

A joint tenancvma?7legally exist in Texas if expressly created by c&tract,- Chandlerv. Kountze 130 S.W. 2d 327 (Tex. Civ.App., 1939 Error ref.) Adams v. Jones, 258S.W. 2d 402 (Tex. Civ.App., 1953).-The foll.owing

definition of a joint tenancy is given in 14 Am. Jur.

79, Cotenancy, Seti; 6.
"An estate In joint tenancy Is one held by two or more persons jointly,with equal rights to share In its enjoymentduring their lives, and having as its distinguishing feature the right of survivorshipor jus accrescendi,by virtue of which the entire estate,upon the death of any of the joint tenants,goes to the survivors,and so on to the last survivor,who takes an estata of inheritance free and exempt from all chargesmade by his deceased co-tenants.
. .' This being the nature of the estatewhich was ,. created by the deed from the father to the sisters, the question is whether on th,e death of NellieA. Dillin - there was a taxable transferunder Article 7117, Vernon's Civil Statutes. The pertinentportions of Article 7117 are the following:

"All property within the jurisdiction of this State,
. D .whfch shall. pass absolutely or in trust by will OP by the laws of descent or distributionof this or any other State, or by deed, grant, sale, or gift made or intended to take effect in possession or enjoymentafter the death of the grantor or donor, shalLupon passing. e .be subject to a tax. 0

. oAny transfermade by a grantor,vendor, or donor, whether by deed, grant, sale, or gift, shall,unless shown to the contrary, be deemed to have beenmade in contemplation of death and subject to the same tax as herein provided if such transfer is made within two (23years prior to the death of the grantor,vendor, or d,onor, of a material part of his estate, or fi the transfermade within suchperiod is in the nature of a final distributionof property and without adaquatevaluable consideration."

-2-Hon. Robert S. Calvert Page 3 OpinionNo. ww-262

The general rule is that no taxmay be imposed in respect to property acquired by survivorshipin case of a joint tenancy under statutoryprovisions taxing transfers by will or by intestate laws. 85 C.J.S. 902, Taxation, Sec. 1143;Attorney Generalv. Clark, 110 N,E. 299 (Mass. Sup, 1915); bl C J 1650 note 4a; In re.Rentz's Estate, 61 N. W. 2d 148'(Mi%. Sup. 1953)*

In 4 C.C.H. Inheritance,Estate and Gift Tax Reporter, par. 1570B, p. 80,212, the following explanation of the general rule is given.

.Jointlyowned property is usually consideredtaxable only by speolfic statutory provision, because, owing to the fact that the interest of the decedentpasses by right of survivorshipthere Is not a transfer by will or under the Intestate laws, so that a specificprovision is necessary to bring such joint estateswithin the scope and operation of the act. The cases, In fact, are almost unanimous in holding that the interest of the survivor comes not by inheritance or succession,and that, accordingly there is no transferunder the intestate laws. The theory on which the taxation of such property Is justified is that, while the vesting of the entire estate by right of survlvorship is not an inheritanceor succession, neverthelessthe death of the decedent ordinarilymakes the survivorthe sole and undisputed owner. Such death enlarges, in practical effect, the quantity of his estate, for up to the death of the deceased joint owner it was withinhis power to have changed the joint estate to a tenancy in common, and hence death, from this point of view, is the generating sourcewhich consummatesthe joint estate in its fullplentitude. But this theory is not wholly convincingor satisfactory, and, like the attempt to tax insurance and dower, rests on an implied assumptionwhich does not stand the test oE analysis. The attempt to tax such interestmay be criticized as perhaps an unwise extensionof inheritance taxation to objects properly beyond Its reasonable scope. In addition to the Federal Government most of the stateshave a specific statutoryL I

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Hon. Robert S. Calvert Page 4 OpinionNo. WW-262

provisionmaking the vesting of joint estates by right of survivorshiptaxable. A number of stateshave no statutoryprovisions,

### and in most of these joint estates are not taxed, but in SouthDakota, prior to the adoptlon of a specificprovision taxing as to jointlyheld property, the taxing authorities taxed such interest as a matter of general constructfon. The soundnessof such a constructionis possibly open to doubt,"
You are thereforeadvised that no Inheritance tax accruedwhen the surviving sisters succeededrespectivelyto l/2 of the deceased sister's interest.
SUMMARY The surviving joint tenants do not owe any inheritance tax upon the interest received at the death of a joint tenant. Yours very truly
WILL WILSON Attorney General

MMP/fb
APPROVED: OPINION COMMITTEE: George P. Blackburn, Chairman Ralph Rash
Wm. R. Hemphfll REVIEWFDFORTHEA'Pl'GRNEYGENF.RAL By: JamesN.Ludlum